In a recent study by BMO Financial Group, Canadians are optimistic about paying off debt and half expect to be debt free by 2017. With all the news about increasing debt level and all the economic troubles debt has created is this really possible?
It depends on who you are
Being debt free is already a reality for some. In fact this study suggests that 26% of Canadians are already debt free.
For others, like a young couple with a new marriage, a new house, a new car, new kids and relatively new jobs, being debt free may seem like a lifetime away.
That being said, there may be others who clearly can see the finish line to being debt free. One example might be a baby boomer couple who are now at the peak of their income potential. Their kids have left and as a result, their expenses have dropped. Their retirement is just a few years away and paying down debt is a real priority. I’ve seen people paying off $10,000 to $50,000 per year in these periods prior to retirement.
And then there’s the already retired who is mortgage free but is still working part time to get our of the house but also make a little money to pay off the last of the line of credit.
Studies are a dime a dozen.
If you think about it, there are so many studies these days. In fact there’s a study to prove any point you want. This particular study was based on an online survey of 1507 people over a 3 day period so does it really accurately represent the reality of all Canadians? Do the results really matter?
If this study motivates just one person to pay off his or her debts faster then it makes it all worthwhile but other than that, be careful about the headlines and what these studies are suggesting.
Putting the ‘personal' in personal finance
Remember that personal finance is truly personal. It does not matter how much debt other people have. It does not matter how quickly or slowly other people are planning to pay off debt. Some people may be a great position to be debt free by 2017 while others won’t. The ONLY thing that matters is your debt and how it affects your life. Which camp do you belong in?
If you have too much debt, figure out strategies to pay it down. If you have no debt, pat yourself on the back and go back to enjoying your life.